ADB report recommends ways to improve investment in Fiji
A new report on investment in Fiji has found political uncertainty has been one of the main reasons for the country not reaching its potential.
A new report on investment in Fiji has found political uncertainty one of the main reasons for the country not reaching its potential.
The Asian Development Bank report, Re-Invigorating Private Sector Investment, suggests measures to create a climate for sustained investment.
Ideas include a more open environment for public debate, simplified investment incentives, strengthened infrastructure and improved understanding of contract law.
An ADB economist, Paul Holden, told Sally Round how Fiji is being held back.
PAUL HOLDEN: Infrastructure is expensive, connectivity has not been that good. The attitude towards foreign investment has not been as welcoming as it might be. I think in many ways government is aware of some of these things and is moving to try and address them. What is encouraging is that investment has really spiked up over the last year or so, and I think everyone is looking to the restoration of political normalcy next year.
SALLY ROUND: Reducing political uncertainly, one of the key challenges, the report says, and encouraging investment in the private sector. Do you think the moves so far have been enough towards improving that atmosphere?
PH: I think the moves have been in the right direction, but I think that further progress in this area is still needed. As in other Pacific Island countries, Fiji has had quite an ambivalent attitude towards foreign investment and that remains. Now, there have been some changes and some have been good and some have been not so good. I think, though, in general the thrust of policy is in the right direction. But I think more needs to be done.
SR: The report says that Fiji's regulatory requirements remain difficult for businesses to comply with. Can you expand on that?
PH: Certainly. And I should add as well that a lot of the conclusions of the report were based on discussions that took place early last year, so there have been further developments in the right direction. I again think that government is aware and is moving in the right direction, but as in other Pacific Island countries Fiji has a lot of regulatory hoops through which businesses have to jump in order to be able to do business, and this distracts from their core function, which is to produce things, make sales, collect money and invest more. And this is really one of the problems. In addition, the investment incentives create a complex web of rules that those in the know can take advantage of, but it's been demonstrated that investment incentives are a very poor instrument with which to promote growth.
SR:What about the certainty of doing business in the country? Are regulations by decree helping the business environment?
PH: One of the things we found, and this was raised by virtually every business person we spoke to, was the rate at which decrees were being issued was very hard to keep up with, although some of the decrees were undoubtedly in a positive direction. There was such a volume that they had trouble digesting them and knowing exactly where they stood. So this has not contributed to business certainty. The rate at which this is happening has slowed down somewhat, which is really quite positive. As I said, that plus the move towards democracy and democratic elections next year is very positive. Fiji has the potential to be a very dynamic economy, but so far its potential has yet to be realised.
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